Posted on 06/30/2024 5:19:45 PM PDT by lasereye
Nike shares on Friday tumbled nearly 20% after the company said it expected sales to decline in its new fiscal year, the latest sign of severe turbulence at Oregon’s biggest company.
It was the biggest one-day drop in Nike history, wiping out roughly $28 billion in shareholder wealth.
Even before Friday’s tumble, Nike’s stock had been heading steadily downward after climbing above $170 in November 2021. Shares closed Friday at $75.36.
Under CEO John Donahoe, who started work in 2020, the sportswear giant bet heavily on direct sales and the popularity of Nike classics, like Air Jordans, Dunks and Air Force 1s. The move away from wholesale opened shelf space for competitors, including Hoka and On, who have gained momentum.
Thursday night, the company said demand for “lifestyle” sneakers, like Dunks, is slowing more than previously expected.
“We were surprised at what we saw on these larger franchises as we were navigating through the … quarter,” Chief Financial Officer Matt Friend said on a call with stock analysts.
Friend forecast a mid-single digit sales decrease in the Nike fiscal year that started June 1. Analysts previously expected sales would increase roughly 2%, according to Bloomberg.
“Last night was a big disappointment across the board,” said Brian Yarbrough, an Edward Jones consumer research analyst. “There weren’t a lot of positives in there.”
Before Friday, a one-day 19.5% price drop on Feb. 27, 2001, was the worst day for Nike’s shares. That day, the company said a new ordering system “wrecked its shoemaking schedule,” leaving Nike with “double the needed amount.”
On Thursday’s call, Donahoe and Friend used the word “comeback” five times between them as they worked to convince investors that Nike’s previously announced plans to invigorate its product pipeline will bear fruit around the holiday season.
The company’s also laid off 2% of its corporate workforce, part of a $2 billion cost-cutting plan.
Some analysts remained skeptical, especially after the sudden change in Nike’s sales forecast.
“Management credibility is severely challenged and potential for C-level regime change adds further uncertainty,” wrote Stifel Managing Director Jim Duffy in a note to investors.
Williams Trading analyst Sam Poser put it more bluntly.
“Nike is a mess and is deflated, as is any confidence we may have had,” he wrote, adding how recent layoffs and voluntary attrition have left the company short-handed at a moment of crisis.
Edward Jones’s Yarbrough was less pessimistic given Nike’s track record.
“If you go back in history, when Nike puts its full force behind innovation, usually the following several years are very good.”
Their target market has realized that shoplifting makes a lot more sense than actually paying for the product.
What makes them believe their customer base even know who “Jordan” is?
Can’t collect the loot if they’re pinched.
Nike plots $100-and-less sneakers to lure price-conscious shoppers
That is too bad...:)....:)
I stopped buying any Nike stuff (not that I had a lot of their gear) after they hired Michael Vick after his dog fighting conviction. They have been dead to me since. The other footwear companies may be just as bad. To be honest I don’t know but I now tend to buy as best I can non logo items as much as possible.
What is a “lifestyle sneaker?”
Woke = Broke
I am absolutely proud to be able to boast that I have not once in my lifetime owned or worn anything made by Nike.
Haven’t purchased a Nike product since 1993. Their quality does not impress me.
Great!
I am absolutely proud to be able to boast that I have not once in my lifetime owned or worn anything made by Nike.
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Same here.
https://www.foxnews.com/sports/nike-responds-to-backlash-over-dylan-mulvaney-partnership-instructs-customers-to-be-kind-be-inclusive
Nike also pushed to have 50% of their staff be "diversity" hires by 2025. They've had four "Chief Diversity, Equity, and Inclusion Officers" (Chief - Didn't Earn It - Officer) since 2020. It's as though fake reparations for non-white people will compensate for use of actual Uighur slaves.
While a lot of this is karma and "going broke, get woke, go more broke", a lot of it is that they simply don't have a basketball player who can pimp out enough sneakers. Trying to have model Gigi Hadid and actor Bradley Cooper shill for them just doesn't translate into sales.
True story: I'd never owned nikes prior. The only shoes which would fit me - WIDE feet - at basic training were nikes. After I returned home - with a mere number of miles on them from PT - they went on the shelf. Years later, after a move, I grabbed the still 'nearly like new' running shoes and the soles were literally falling off.
For years i bought the same style nikes.
Finally 2 years ago I switched to a similar style Reebok.
What a difference in comfort and durability.
I’m never going back.
I bought a pair of Nike running shoes back around 1980. The toe box didn’t fit my feet at all, and after I lost a couple of toenails I threw the shoes out. No idea what sort of mileage they would have been good for if I’d kept them.
Worst running shoes I ever had except for a pair of Brooks. Those about crippled me.
It was new balance 990s for me for PT. The uppers held well til I had to replace them when the soles wore out. They are will made and you will pay a lot for them but nearly bomb proof.
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